Fidelity’s Thorpe Talks Yield, 2026 Outlook

It’s no secret that the fixed income landscape has come back to life after years of relative quiet. Where investors once had to really look for sources of income or yield, the live rate market has brought plenty of opportunities to fixed income. The recent VettaFi Q2 Market Symposium took on the 2026 outlook during the webinar titled “The Yield Tug-of-War: Solving the Active-Passive Puzzle in Fixed Income,” including leaders from Fidelity Investments and Invesco.Key Takeaways: The fixed income landscape has sprung to life, but what does the 2026 outlook hold for investors? Active ETFs like those offered by Fidelity Investments can help navigate the myriad opportunities available. Yields can be found especially by active ETFs that can adapt or even find standouts that other funds may miss. The segment, hosted by VettaFi Director of Research Cinthia Murphy, included input from Fidelity Investments Institutional Portfolio Manager Christine Thorpe and Invesco fixed income Head of Business Strategy and Development Stephanie Larosiliere. The duo not only discussed how they are seeing the fixed income landscape, but the ETF options the firms offer. Thorpe, who joined Fidelity Investments in 2011, shared her view that yields in fixed income are still attractive. Credit market valuations are still tight and expensive relative to the past across investment grade and high yield corporates. She explained that the U.S. economy has been very resilient, and this environment may persist for a while longer given a strong corporate backdrop and strong consumer spending, particularly driven by the highest income earners. However, she noted that it’s “hard to see … credit spreads tighten meaningfully from here.” “So our expectation is at some point, spreads will likely widen out,” she said. “It’s always hard to know what that catalyst is going to be. There is no shortage of potential areas where we could see that stem from, but we know at some point the market will likely present an opportunity to add risk.” She explained that the firm’s Fidelity Total Bond ETF (FBND B) is currently “risk on” and “modestly” out yielding the Agg. That said, she added, it is still on the lower end of risk relative to its history. FNBD charges a 36 basis point (bps) fee for its active approach. Furthermore, Thorpe pointed to the strengths of active management as a key tool in the current landscape. The size of the broader bond markets outside of the Bloomberg U.S. Aggregate Bond Index, she said, gives FBND plenty of places to find opportunities. Given that the Agg is a “negative selection index,” in that issuers represent a bigger portion of the index as they issue more debt. One area where this is playing out is with the large tech companies. “We’re seeing a tremendous amount of corporate debt issuance from the big hyperscalers as they look to fund their data center build out as it relates to AI,” she said. “And so  the expectation is that trend is going to continue for the foreseeable future.” “At the same time, they’re issuing that debt at really tight valuations. At some point, perhaps the market has trouble digesting that supply,” she added. “We haven’t seen that yet, but I think that’s one area,  where active management in today’s environment can play a role. We have the ability to decide whether it makes sense to be a little bit more underweight [in] that sector.” Fidelity Investments also offers other active ETFs to help investors get more out of the 2026 outlook. For those looking to the front end of the curve, it offers the Fidelity Limited Term Bonds ETF (FLTB B). FLTB charges 25 bps for its active approach to shorter duration, less rate sensitive offerings. Thorpe also highlighted the firm’s recently-launched CLO ETFs. (FCLO), the Fidelity CLO ETF, launched in February and currently charges a zero bps fee*. It actively invests in BBB+ to B- CLOs to generate income. Overall, the rise of active ETFs can help get investors more from the 2026 outlook for fixed income. For more on the webinar, investors can go to this link. *Through January 31, 2027, Fidelity is waiving the fees for Fidelity AAA CLO ETF (20 basis points) and Fidelity CLO ETF (45 basis points). For more news, information, and analysis, visit the ETF Investing Content Hub. Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles. 1264318.1.0